Such a review will likely bring down delays in the admission and resolution of such cases in the bankruptcy court, the official said.

“There are delays in admission stage,” Joshi told reporters after a review meeting of MD and CEOs of public sector banks and other state-owned financial institutions, including the National Asset Reconstruction Co. Ltd (NARCL).

The government had called the meeting to review cases pending long for admission and resolution under IBC, and look for ways to clear up the pendency.

The review had become important given that in several IBC cases, over one year is spent just to get the matter admitted in tribunals, while the resolution process itself stretches far beyond the 360-day timeline.

According to official figures, public sector banks wrote off over ₹7 trillion worth of bad debt in five years between 2019 and 2023. Also, against ₹6.5 trillion worth of stuck assets, ₹ 94,000 crore or a mere 15% was recovered in 2023, with more than half of the recovered amount coming through the IBC route.

The finance ministry’s concerns on rising cases of pendency under IBC comes after the Reserve Bank of India batted for early settlement of bad loans and also recently directed banks to tighten their lending norms and avoid any form of exuberance to make lending sustainable and prevent built up NPAs.

Till September, 2023, of the over 7,058 cases admitted to the National Company Law Tribunal (NCLT), 808 cases have seen resolution under IBC, while 2,249 cases went into liquidation.

Much of these are legacy cases.

However, the bankruptcy code has led to the settlement of a large number of payment defaults prior to their admission to tribunals.

According to the Insolvency and Bankruptcy Board of India (IBBI), till August, over 26,500 applications to NCLT involving default of ₹9.3 trillion have been withdrawn.

Meanwhile, finance minister Nirmala Sitharaman is also expected to review work of NARCL soon.

Typically, NARCL acts as a bad bank, with the objective to manage and dispose of the stressed assets of commercial banks.

Last week, the finance ministry informed Parliament that as of November 2024, the NARCL has acquired ₹11,617 crore of bad debt from public sector banks against an original target of ₹2 trillion set by the Union cabinet in September 2021.

The ministry said: “Some of the accounts acquired by NARCL are under IBC and recovery is possible only after the resolution plan is approved by NCLAT.”

Thus, in the remaining accounts, the NARCL has recovered a mere ₹16.64 crore as of November 30, 2023.

To remove pendency of cases, the IBBI, the rule maker and regulator, has also said that country’s debt resolution capacity should be stepped up by more than three-fold to handle about 1,000 cases a year.

The expectation is that the number of corporate rescue will go up to 300 cases this financial year itself from around 180 cases last financial year.